- The US merchandise-trade deficit widened 2.1% in September to $134.9 billion, the largest since March 2025 and a third straight monthly increase, Commerce Department data showed Wednesday. Economists surveyed by Bloomberg had expected it to narrow to $130.2 billion, so the gap came in about $4.7 billion wider than forecast (Lumida calculation).
- The AI buildout is the driver. Imports of capital goods, a category that includes computers, semiconductors and telecom equipment, jumped 7.5% to a record, and the capital goods deficit is now $54.3 billion larger than a year ago, more than the entire widening in the overall deficit over that period.
- Trade is weighing on growth. Before Wednesday’s data, the Atlanta Fed’s GDPNow model saw net exports subtracting 2.86 percentage points from third-quarter GDP growth, after they subtracted 1.10 points in the second quarter.
- Economists expect a partial offset from business investment. Pantheon’s Oliver Allen said the drag “likely will be partly offset by a very big jump in equipment investment,” and some imports should show up in inventories, though he said the latest data suggest the offset will be modest.
What Happened?
Merchandise imports rose 2.4% in September while exports advanced 2.6%, but the larger import base meant the dollar gap still widened. Consumer goods imports rose 3.1%, the most in four months, though they remained 12% below a year earlier. On the export side, consumer goods shipments rose 6.5% and food, feeds and beverages jumped 12.8%, partly offset by a 1.6% drop in industrial supplies. Retail inventories rose 0.3% and wholesale inventories increased 0.6%.
Why It Matters?
The report shows how dependent the US AI buildout is on imported hardware. “So much of the hardware that the tech companies need is coming from overseas, driving a massive widening in the trade gap,” said Santander’s Stephen Stanley. That creates a statistical tug-of-war in GDP, where the import surge subtracts from growth while equipment investment adds to it, making headline growth numbers harder to read for the Fed and for investors. It also means the AI capex cycle is supporting foreign chip and equipment makers as much as domestic producers.
What’s Next?
The government’s first estimate of third-quarter GDP will show how much equipment spending offsets the trade drag. Fuller monthly trade figures, including services and inflation-adjusted goods data, are due Nov. 4. Investors will also watch whether this week’s Big Tech earnings point to even higher capex, which would likely keep capital goods imports elevated.
Affected Tickers and Coins: SPY, SMH, IEF
Source: Bloomberg
